In this kind of bear market, investors are looking for the slightest positive signal to reverse the trend. It's a technique that always works: there is a point where you hit bottom. The advantage of stock markets is that the next bottom is always higher than the previous one, with enough time. This is why, despite chronic episodes of stock market panic, long-term index charts look like a nice bullish slope.
Yesterday, red was still the order of the day across the board, and attempts to rebound were aborted in the US. The session was moderately volatile and the Nasdaq 100 fell 0.44% and the S&P500 index lost some 0.6%. This is rather mild compared to previous sessions, but investors did not get the technical rebound they were hoping for, following the previous sessions 5% drop.
The large technology stocks continued to correct, which obviously does not help Wall Street indexes. About half of the S&P500's decline this year is attributable to 8 stocks and the other half to 492 others. This is the calculation made by the Wall Street Journal between January 1 and May 17. It shows that Microsoft, Apple, Amazon, Alphabet, Meta Platforms, Tesla, Nvidia and Netflix "cost" the index 6.82%, while all the others contributed 6.92% to the liabilities. Over the period, the S&P500 lost about 13.8%.
Still, investors got a positive signal today that has allowed US, European and Asian markets to return to the green. China cut its benchmark rate for five-year mortgages last night, to support a weakened real estate sector. Given the weak economic momentum in China, made up of a real estate crisis, punitive policies towards tech companies and zero-covid policies, any measure in favor of recovery is welcomed. One could argue that this is a small measure that shows that the Chinese central bank still does not want to draw a major support plan, but the stock markets are satisfied with little at the moment.
Today's economic highlights:
There will be no major indicators today.
The dollar is trading at EUR 0.9465. Gold is trading at USD 1841. Oil is holding its ground, with North Sea Brent crude at USD 111.64 per barrel and U.S. light crude WTI at USD 109.21. The yield on 10-year U.S. debt is down to 2.84%. Bitcoin is trading around USD 30,000.
* Applied Materials - The semiconductor equipment and materials specialist's stock was down 1.8 percent in pre-market trading after it announced Thursday night that its revenue and profit forecasts for the current quarter were below Wall Street expectations. At least seven financial analysts lowered their price targets.
* Foot Locker - The U.S. sports retailer's stock jumped 4% in premarket trading after a better-than-expected quarterly profit and an increase in its annual outlook.
* The Boeing Company - The Starliner space capsule designed and built by the group was launched Thursday to the International Space Station, a long-awaited success after two years of delays and significant cost overruns.
* Tesla - Elon Musk, the electric carmaker's chief executive, said Thursday that he has the company on his mind "24 hours a day, seven days a week," trying to reassure investors who fear his proposed takeover of Twitter would distract him from his core duties.
* Blackstone - Shareholders of Australian casino group Crown Resorts have accepted Blackstone's proposed $6.3 billion buyout, but the deal still needs to be approved by the relevant Australian state authorities.
* Farfetch - Richemont said Friday that discussions with several interlocutors on the creation of an online sales platform were progressing but taking time. In November, the Swiss company announced its intention to sell a stake in its subsidiary Yoox Net-a-Porter to Farfetch.
- Apple: BofA Securities lowers price target to $200 from $215, on supply chain headwinds, maintains buy rating
- AvalonBay Communities: Scotiabank adjusts price target to $238 from $262, keeps sector perform rating.
- Bentley Systems: Oppenheimer puts bentley systems at outperform with a price target of $40.
- Crowdstrike: UBS adjusts price target to $240 from $285, maintains buy rating.
- Cisco Systems: Baird adjusts price target to $47 from $62, maintains neutral rating.
- Comerica: Baird upgrades to outperform from neutral. PT up 17% to $85.
- Hikma: Jefferies remains Buy with a price target reduced from GBp 2950 to GBp 2290.
- Lowe's: Goldman Sachs adjusts price target to $227 from $239, maintains buy rating.
- Lululemon Athletica: Argus lowers price target to $310 from $424, maintains buy rating.
- NatWest: Investec upgrades from hold to buy targeting GBp 245.
- Nvidia: Oppenheimer adjusts price target to $300 from $350, maintains outperform rating.
- Royal Mail: Berenberg remains Buy with a price target reduced from GBp 650 to GBp 575.
- Snowflake: Morgan Stanley adjusts price target to $322 from $355, maintains overweight rating.
- Synopsys: UBS adjusts price target to $360 from $396, maintains buy rating.
- Target Corporation: Guggenheim lowers price target to $225 from $295, maintains buy rating.
- Trex: Exane BNP Paribas upgrades to neutral from underperform. PT up 21% to $75.
- Under Armour: Williams Capital downgrades to hold from buy, lowers price target to $10 from $22.
- Zoom Video Communications: Barclays lowers price target to $90 from $150, maintains equalweight rating.